IMPORTANT POINTS
(1) Initiation of CIRP – Exclusion of period of limitation – In absence of provisions for exclusion of such period in respect of application under Section 9, IBC, despite combined reading of Section 238A, IBC and provisions under Limitation Act what is legally available to such a party is to assign the same as a sufficient cause for condoning delay under Section 5 of Limitation Act.
(2) Existence of a ‘pre-existing dispute’ should entail dismissal of an application filed under Section 9 IBC at threshold.

JUDGMENT :

C.T. Ravikumar, J.

1. This appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016 (IBC) is preferred by Sabarmati Gas Limited (hereinafter referred to as the appellant) against the final judgment dated 19.12.2019 of the National Company Law Appellate Tribunal (NCLAT) in Company Appeal (AT) (Insolvency) No. 820 of 2019. As per the same the NCLAT dismissed the appeal preferred by the appellant against order dated 27.06.2019 in CP (IB) No. 516/9/NCLT/AHM/2018 of the National Company Law Tribunal, Ahmedabad Bench, (NCLT) dismissing the application filed under Section 9 of the IBC, in its capacity as operational creditor of ‘Shah Alloys Limited’ (hereinafter referred to as the ‘respondent’).

2. In the captioned appeal mainly, twin questions of law call for consideration id est :-

(i) Whether in computation of the period of limitation in regard to an application filed under Section 9, IBC the period during which the operational creditor’s right to proceed against or sue the corporate debtor that remain suspended by virtue of Section 22 (1) of the Sick Industrial Companies (Special Provisions Act, 1985) (SICA) can be excluded, as provided under Section 22 (5) of SICA?

(ii) Whether the respondent has raised a dispute which is describable as 'pre-existing dispute’ between itself and the appellant warranting dismissal of application under Section 9 of the IBC at the threshold?

While considering the stated twin questions certain other allied questions of relevance may also crop up for consideration, which we will state and consider at the appropriate time. The respondent -corporate debtor was the petitioner in Case No. 13 of 2010 before the Board for Industrial and Financial Re-construction (BIFR) and the appellant herein was the applicant in Miscellaneous Application No. 432 of 2013 in Case No. 13 of 2010.

3. Heard learned Senior Counsel for the appellant Shri Shyam Divan and Mr. S. Guru Krishna Kumar, learned Senior Counsel for the respondent.

4. Consideration of the questions, mentioned above and to be mentioned hereinafter, is called for, in the following factual background:

The respondent, for its manufacturing needs, required commercial supply of natural gas. To facilitate the same on 30.05.2008 the appellant and the respondent entered into a Gas Sales Agreement (GSA) whereby and whereunder the appellant was having the obligation to supply natural gas conforming to the specifications laid down in Annexure-2, appended to GSA and it also forms part of the contract. Going by clause 11.2 of GSA, notwithstanding any dispute in relation to any amount invoiced, the respondent could not withhold payment in accordance with the GSA. According to the appellant, the respondent defaulted payment of invoices inasmuch as it made only partial irregular payments from November, 2011. Meanwhile, the respondent approached BIFR to get it declared as a ‘sick unit’ and for recommendation of a plan for its rehabilitation, in terms of the provisions under SICA. The reference was admitted by BIFR as case No. 13 of 2010 and as per order dated 31.08.2010 the respondent was declared as a ‘sick company’. It is the case of the appellant that by virtue of Section 22 of SICA there was a moratorium on the respondent and therefore, it could not have proceeded against the respondent for outstanding dues, thenceforth, without obtaining the permission of the BIFR. On 07.08.2012 the appellant stopped the gas supply and then, intervened in the pending proceedings before the BIFR viz., 13 of 2010. On 08.03.2013, as per Miscellaneous Application No. 432 of 2013 the appellant sought permission of the BIFR for initiating proceedings against the respondent for recovery of an outstanding dues of Rs. 4,71,56,095/-. On 09.09.2015, the BIFR passed an order thereon. Shortly thereafter, to be precise, w.e.f. 01.12.2016, SICA was repealed.

5. According to the appellant, BIFR became functus officio and all proceedings pending before it, including the case of the respo